If you’ve been pondering whether or not to invest in precious metals, it’s important to remember that a balanced investment portfolio should have many types of investments – you shouldn’t rely on only one asset to help your hard-earned money grow.
Commodity investing, and precious metals in particular, is one area investors look at as a safe store of value in times of market fluctuation. Included under the umbrella of commodity investing are precious metals, with a special focus on gold, silver, platinum, and even copper as stores of value.
So how does an everyday investor purchase precious metals? And how much of your portfolio should you have in commodities and raw materials?
Let’s take a look and find the answers to these and many other questions.
What are precious metals?
Precious metals can be defined as rare and especially valuable metals, with gold, silver, and platinum being a few of the most commonly traded types. These metals can be bought and sold, with prices that rise or fall like stocks or bonds.
Precious metals such as gold can be worn as jewellery but are also used for industrial purposes, like:
- dentistry tool production,
- inside various electronic components, and
- manufacturing solar panels.
In any case, let’s take a look at the most common ways to invest in precious metals, determining which may be best for you.
Investing in gold
Gold is a commodity that’s consistently been mined over human history. In fact, ancient grave sites in Bulgaria contain gold artifacts that experts estimate are at least 7,000 years old.
These days, gold can be bought in just about any size, amount, or value and the unit of measure most commonly used for it is “troy ounce.” One troy ounce is roughly equal to 31.1034768 grams and is written as either “t oz” or “oz t.”
In Canada, a popular product is the Canadian Gold Maple Leaf, a gold bullion coin made by the Royal Canadian Mint with a face value of $50.
So, is gold a good investment?
The answer to this question is ultimately up to the individual, but there are drawbacks to owning gold that should be noted.
The first is that our current financial system isn’t based on gold. In fact, in 2016 the Bank of Canada had no gold reserve at all, which is quite unusual since all other G7 nations held at least 100 tonnes of gold in reserve at that time.
Gold is also harder to turn into cash than stocks, bonds, or other assets. And you have to consider the cost of storage if you buy physical gold, as well as insurance.
Selling bars, coins, or other physical forms of gold can be pretty tricky too. You’ll need to put in the time and effort to find a buyer, go through the motions of agreeing upon a deal, and organize transportation for the gold.
As this article from the Globe and Mail pointed out a few years ago, holding onto physical gold means you don’t earn anything on it, and its value is unpredictable. In fact, it’s considered a speculative and emotional commodity, which makes it rather volatile.
All of this means you’re unlikely to make a profit if and when you do sell.
Of course, this is all referring to physical gold. If you’re holding onto gold futures, ETFs, or mutual funds instead, it’s easier to offload your investment and turn profits into cash. It’s also less complicated to hold within a tax-sheltered account such as an RRSP or a TFSA.
Investing in silver
Silver is another option for those interested in precious metals, and it has many practical uses, industrial and otherwise. Mostly, though, silver is used for jewellery and bullion, just like gold.
But silver isn’t as dense as gold, nor is it as valuable per ounce – which means it’s more affordable for investors. Some of the major banks offer certificates of ownership, which means you own the silver but don’t have to take physical possession of it.
And, like gold, there are ETFs, stocks, and futures available, all of which offer simpler ways to own silver.
The price of silver can be much more volatile than gold, with high-highs and low-lows. But overall, silver’s low price is what makes it attractive as an investment for everyday people.
Investing in platinum
Another investment option for those considering precious metals is platinum. It’s denser and therefore heavier than gold, and it’s actually quite a bit more rare – only 160 tons of platinum is extracted from the earth’s crust each year, versus 1,500 tons of gold.
You’d think that this would make platinum more expensive than gold, and it may have been in the past, but it currently costs half as much per ounce as gold.
Platinum, like gold and silver, has industrial applications and is used in everything from fertilizers to car parts.
For the precious metal collector, platinum bars and coins are available, but you can also purchase platinum as an ETF or even buy shares in a mine.
Investing in palladium
The last precious metal we’ll discuss is palladium, one that is less recognized by investors than gold but just slightly more valuable than gold.
And, like other precious metals we’ve discussed, it’s used to make exquisite jewelry but has industrial purposes too. Its use in manufacturing catalytic converters for cars and automobiles is probably the most common way it’s being used these days, but its application in dentistry is also notable – it’s used for fillings and crowns.
If you’re considering an investment in palladium, it’s worth noting that most mines that produce palladium are primarily focused on other metals – the palladium is simply a byproduct. There are a few ETFs you can work with, but as for purchasing physical palladium bars and coins, these can be hard to find.
Want to dip your toes in investing? Check out our beginner’s guide to starting investing in Canada.
How to invest in precious metals in Canada
Although people have been using and investing in precious metals throughout the centuries, modern investing has changed the way we do things. We’ve touched on the fact that there are multiple ways to invest in these metals, but let’s take a closer look at these methods.
In Canada, there are 3 main ways to invest in precious metals.
Buy precious metal certificates
The first is through certificates, which act as a representation of the physical bars or bullion you own.
Obviously, carrying around gold bricks can be rather cumbersome, not to mention dangerous, so certificates are a convenient way to prove your ownership while the physical items are stored elsewhere.
Banks will store the bars, bullion, coins, etc., for you if your certificates are purchased through them, making things much more simple.
And, of course, these certificates can be cashed in at any time.
Invest in precious metals through your online broker
A 2nd more indirect way to invest in precious metals is to use an online broker. There are a few ways this can take shape.
First, you can invest in precious metals by purchasing an ETF with diversified precious metal holdings. This can be done through brokers, and with a few simple clicks, you can own holdings in precious metals.
You can also purchase shares in mining companies. By purchasing stock, you’re investing in the direct discovery and distribution of these metals. Of course, mining industries are worth researching before you invest – not all companies are made equal and not all companies practice ethical means of mining.
Getting into precious metal investing this way is very attractive to investors, for a few reasons:
- it’s easy to liquidate stock,
- It’s easy to hold within a tax-leveraged account (RRSP or TFSA) and not pay capital gains on growth, and
- you never have to worry about where you put the certificate or physical bullion.
If you’re interested in this type of investing, take a look at what Questrade has to offer. This low-cost online broker will even let you buy ETFs for free, so you can easily get your hands in the market.
Questrade is one of Canada's top online investment platforms. With very low fees, including no-fee ETF trading, commission-free stock trades, and plenty of investment types, Questrade just about covers it all.
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$25 GeniusCash + $50 bonus for funding a new account, and $0 commissions on stocks & ETFsClick here to compare the best online brokers in Canada.
How to invest in precious metals through a bank
The 3rd most popular way to invest in precious metals is to purchase bars or coins through one of the major Canadian banks. Each bank will have a slightly different way of doing things, so this method gets its own section to explore those options more clearly.
The following is a list of banks that offer this service and the types of precious metals they deal with.
Keep in mind, though, that there are 2 ways gold is priced: spot pricing and futures pricing.
- Spot pricing represents the price per ounce for a metal that’ll be delivered immediately.
- Futures pricing is the price of a metal that’s sold in a contract that details a future delivery date.
So if you want the value immediately, you should look out for spot pricing.
TD precious metals
TD offers a variety of precious metal products in a wide range of forms, but they mostly deal in gold, silver, and platinum.
But whichever metal you’re interested in, TD has various sizes, purities, and forms for each. They offer a variety of options of gold bullion and bars from around the world including the Royal Canadian Mint, the US Mint, and the Royal mint.
Here are a few examples of the forms these metals from TD can take:
- 1oz Britannia Gold bars and Coin,
- 1oz Valcambi Cook Islands Gold Armillary Coin,
- 1oz Black Rhino Silver Coin,
- 100g Silver Valcambi CombiBar,
- 100g Valcambi Suisse Platinum Bar, and
- 1/10oz Platinum Britannia Coin.
When it comes to purchasing from TD, you can do so online, at a TDFX (foreign exchange) branch, or in person at your local branch. It may take time for delivery, but they’ll handle your order and have it delivered to either your home or the bank branch of your choice.
There are no additional fees associated with the purchase of gold, however, there may be extra manufacturing costs for certain products. There shouldn’t be any tax on your purchase either, no matter the size of bullion you are buying (though there may be provincial tax depending on where you live).
CIBC precious metals
As they only offer gold and silver products, CIBC doesn’t quite offer the same range of investment possibilities as other banks. They offer certificates, coins, and bars, including these products:
- 1/4oz Gold Maple Leaf Coin,
- 1oz Gold Bar,
- 10oz Silver Bar, and
- 2022 Silver Maple Leaf Coin.
When it comes to purchasing from CIBC, you can do so online or in-person at your local branch and have your items delivered to your own home, to a nearby branch, or even to the Toronto Pearson Airport.
CIBC also offers e-certificates, which can be held inside a registered account, such as an RRSP or TFSA, where you can easily monitor them online. For anyone concerned about storing their precious metal investments, this is a very convenient option.
Again, there are no additional fees associated with buying gold or silver and there won’t be any tax applied – unless you’re from Saskatchewan, British Columbia, or Manitoba, where there are certain PST amounts added to your purchase.
RBC precious metals
While RBC doesn’t have quite as extensive a listing of precious metal products as other banks, they do still offer gold, silver, and platinum. Here are a few examples of what RBC has to offer:
- 1/10oz gold coins,
- 5oz gold wafers,
- 100oz silver bars, and
- 1oz platinum coins.
Plus, for those interested in precious metal investments, RBC offers gold and silver certificates. These require a minimum purchase of 5oz (for gold) or 100oz (for silver), and, as with most precious metal certificates, can easily be converted into cash at any time.
RBC advises that a coin premium and other additional fees may apply, depending on a few factors, including whether storage is required.
Scotiabank precious metals
Formerly a top player in the precious metals world – since 1684 – Scotiabank wound down its precious metal business in early 2021.
The metals division had been significantly scaled down and was no longer a core business for the Canadian financial institution, but many still remember its golden years (pun intended) in the late ’90s and early 2000s after Scotiabank bought out Mocatta Bullion.
Unfortunately, after several lawsuits and allegations of manipulation (none of which were proven), the result was Scotiabank’s exit from this investment sector.
All of this being said, investors can still purchase precious metal ETFs and mutual funds through their online brokerage Scotia iTRADE.
BMO precious metals
You can purchase 2 types of precious meals through BMO as part of their specialized Gold Deposit Program and Vaulted Physical Silver Deposit Program. Through each, the bank offers the purchase of physical bullion and secure storage in a vault at the Royal Canadian Mint, one specifically reserved for BMO.
There may be withdrawal or delivery fees, as applicable, but you won’t be charged any annual fees, not for storage or anything else.
After purchasing through BMO, you have a few options:
- sell at any point for cash,
- request physical delivery at any time,
- continue to buy and hold more gold and silver.
You can also invest in the BMO Precious Metals Fund or use the BMO InvestorLine for other investment options.
How precious metals compare to other investments
Precious metals are meant to be a store of value, as are most investments. So how do they stack up against other investment types?
Let’s take a look.
| Alternative investment | Pros | Cons | Special features |
|---|---|---|---|
| Rare earth elements | * Developing industry with new demand * Potential for upside on investment | * Hard to physically store * Steep learning curve involved | * Can purchase through ETFs, invest in mines, etc. |
| Real estate | * Physical asset ownership * Renting provides consistent passive income | * Can be volatile, depending on market * Large upfront investment needed (down payment) | * Canadian landlords have significantly reduced taxes |
| Cryptocurrency | * Opportunity to make big gains * Converts easily to cash | * Volatile * Vulnerable to cyberattacks | * Still a developing technology |
Consider investing in rare earth elements
Rare earth elements (REE) is a term used to refer to a group of 15 elements on the periodic table – elements 57 to 71, to be precise. And while not technically REEs, scandium and yttrium are usually included in this category as well.
Typically, these elements have industrial purposes, including:
- manufacturing electronics,
- automobile manufacturing,
- weapons technology, and
- permanent magnet production.
But are rare earth elements all that rare? Well, not really. When comparing the most rare REE to gold, it turns out thulium is 125 times more common than gold.
Real estate investments
There are plenty of modern investors who believe real estate is the best type of investment option. Typically, they believe such because they prefer a physical asset, something they can see, touch, and thoroughly inspect before buying.
And yes, real estate can earn a decent passive income, especially once the mortgage on the property is paid off.
The current Canadian housing market is a pretty tough one, but there are still opportunities for the determined investor.
One area of concern for real estate investors is the additional investment real estate requires – anyone who’s owned a home knows that general upkeep can cost quite a bit. Consider these extra costs:
- property taxes,
- home insurance,
- landscaping work, and
- home improvements and repairs.
And there’s always the issue of turning your investment into cash. It’s not always as easy as we’d like it to be.
Cryptocurrency
In recent years, cryptocurrency investment has been a hot topic, with early investors making big gains over short periods of time.
Much like the housing market right now, crypto has proven to be volatile, so be sure to do your research before taking any big steps.
There are still a lot of old school investors who stay away from crypto – and they have good reason for their skepticism. Those who lost money in the Quadriga scandal will be the first to tell you to be cautious.
But there are certainly perks as well. Here are a few reasons why people enjoy crypto investing:
- easy, convenient, 24/7 buying and selling online,
- often more transparency in trading than with traditional financial institutions, and
- high risk can often mean high rewards.
It’s also important to find a reputable cryptocurrency exchange platform to work with.
We’ve found that Wealthsimple Crypto is one of the most reliable and highly-rated exchanges out there. You can learn more about it (and see a comparison to other options) here:
If you've ever wanted to get into the world of cryptocurrency trading but weren't quite sure where to start, Wealthsimple Crypto is designed for you. Wealthsimple Crypto supports 100+ cryptocurrencies – including Bitcoin, Ethereum and Solana. And while they charge higher transaction fees than other exchanges, the simplicity of Wealthsimple Crypto might be worth it.
- Incredibly easy to get started
- Designed by and for Canadians
- Ties directly to your Wealthsimple account
- Easy to understand transaction fees
- Higher transaction fees than some other options
- Lacks advanced trading features
- Be a Canadian citizen, Canadian resident, or have a valid Canadian visa
- Meet the minimum age requirement set by your province
- Have a Social Insurance Number (SIN)
- Have a Canadian residential address
- Satisfy identity verification requirements
- Quick and easy sign up
- No account minimums
- Simple and transparent pricing
- No fees to deposit or withdraw
- Extensive cold storage insurance coverage
Compare top crypto exchanges in Canada here.
Pros and cons of investing in precious metals
As with any investment, there are benefits and drawbacks to precious metal investments, and we’re going to consider a few from both sides.
| Precious metal | Pros | Cons |
|---|---|---|
| Gold | * Safe haven * Low long-term volatility * Tangibility | * Expense * A speculative asset * Can be hard to store |
| Silver | * Lower cost to get invested per ounce than gold * Tangible asset | * Greater volatility than gold * Storage concerns * Liquidity issues |
| Platinum | * Lower cost to get invested per ounce than gold * Tangible asset | * Speculative * Difficult to store * Liquidity issues |
| Palladium | * Lower cost to get invested per ounce than gold * Tangible asset | * Speculative * Presents storage issues * Not as popular as a store of value |
You’ll notice a few common downsides to each of these metals – they’re all physically difficult to store, have liquidity issues, and are subject to speculation.
But the perks can often outweigh these issues.
Let’s take a look at these in a bit more detail.
3 pros of precious metals
These benefits of precious metal investments can’t be denied. And really, gold isn’t going to lose its appeal anytime soon.
1. Precious metals can be a safe haven during inflation
When investing in gold and silver, you don’t have to worry about it being exponentially reproduced to a point where its value bottoms out. Because of this and several other factors, it is seen as a safe haven for Canadian investors.
As mentioned earlier, precious metals are typically used as a place to safeguard money in times of high inflation. What we’ve witnessed up to this point hasn’t proven this theory correct, but there are still many people out there who haven’t let this change their minds or deter them at all.
2. Low long-term volatility
In some ways, investing in gold and silver can be compared to the tortoise and the hare story. Just as the tortoise’s slow and steady pace gained him great rewards, so gold and silver maintain relatively stable value over long periods of time and provide investors with rewards in the end.
While the market prices certainly fluctuate, their consistent demand in manufacturing, renewable energy, and other areas keeps the prices stable over time, making them a solid choice for diversifying your portfolio.
3. A uniquely tangible investment
Some investors prefer to be able to actually put their hands on an investment. This could be due to bad experiences, or simply because they believe tangible assets provide stability during times of economic uncertainty.
Precious metals can provide this type of satisfaction. Whether it’s stored at home in a personal safe or kept at a different location, investors can enjoy peace of mind knowing they have the physical items in their possession.
3 cons of precious metals
Of course, there are drawbacks to precious metal investing too.
1. Precious metals, especially gold, can be expensive to buy
The cost per ounce of gold alone can put it out of reach for many investors.
At the time of writing, the cost is CAD$75.13 per gram, with fluctuations happening all the time.
If you’re more interested in bullion, you’ll be looking at a much higher price tag of about $2,333.43 per coin. These prices can scare anyone, but beginner investors especially.
2. Not always as liquid as you may need it to be
It’s not easy to use precious metals – you can’t exactly use your bullion to buy groceries.
If you do purchase physical gold, silver, or any other precious metal and eventually decide to resell, you need to find a buyer, and this can be rather tricky, taking both time and considerable effort.
3. You need to figure out how to store your precious metals
Perhaps the biggest issue with physical precious metals is its need for storage.
Where can you put it that’s it safe and secure? There’s only so much you can tuck inside your mattress before it starts to rattle.
Storage can get complicated and expensive, making it one of the biggest reasons why investors choose not to go with precious metals.
FAQ
What are the benefits of investing in precious metals?
Precious metals offer a physical asset with exposure to the commodities market. You can gain exposure to precious metals through the stock market, physical bullion, or certificates. Learn more about your investment options here.
Should I invest in TD precious metals?
Investing in a certain product with a particular bank is 100% up to the individual investor, but you should always do your homework. But yes, TD is a trusted place many Canadians go for investing, including precious metals. You can read more about what TD and other banks can offer you right here.
Which are the best precious metals to invest in?
Which precious metal you should invest in is up to the individual investor but the most common appears to be gold, followed closely by silver, platinum, and palladium. You’ll find more information on each of these metals here.
What’s the best way to invest in precious metals?
There are plenty of methods for investing in precious metals, and it’s hard for anyone else to decide which method is best for you. You can read up on the different investment methods here and get a better understanding of what your choices are before deciding which will work best for reaching your goals.
Can I invest in precious metals ETFs?
Yes, ETFs are a convenient and valuable way to go about investing in precious metals, especially if you hold that investment inside an RRSP or TFSA. It’s an especially handy method for those who want to avoid the hassle of transporting and storing any gold bars or similar metal products.
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